HR for New Age Organization by Professor S

HR for New Age Organizations
Prof. Shailendra Nigam
shailendra@imi.edu

Lately, Human Resources has become a very hot
topic—for reasons both good and bad.
• The good: There is sufficient research to show
that executive leadership wants and needs a
business partner that adds value to the
organization and the bottom line.
• The bad: for the most part, HR is simply not
delivering.

Growth of Internet Users in India
Year Users of
Internet
Country Population Country’s share in
world Internet
Users
2020 564500000 1,380,004,385 12.37%
2019 525300000 1,366,417,754
2018 483000000 1,352,642,280

Working in Startups?
• Offers from the e-commerce/startup space have gone up by
120% over the past one year alone.
• Top recruiters from B-schools include, Flipkart, Olacabs, and
Amazon, Appsdaily, Commonfloor, Shopclues, Urban Ladder,
PlayGames24x7, Zovi and Uber.

• Myntra had hired more than 10 McKinsey
consultants.
• Venture Capitalist firms like Rocket Ventures had
also targeted consulting talent.
• When Fab Furnish an online furniture store started,
the firm picked up an ex-McKinsey, BCG and Bain
consultants to kick start operations.
Basically all new age and startups are looking for multiple oriented
professionals instead of single domain specialist

Indian Startup Journey…
Stage 1: Infosys: Narayan Murthy in 1981
Stage 2: Make My Trip: Deep Kalra in 2005
Stage 3: Flipkart, Snapdeal, etc…
Now many more in the list……

Inventions or Innovations ?
Essential Attribute:
• Idea/disruptive product
• Business/customer Value Proposition
• Better than competitor
Life Cycle: Do not know

Theories
• Reactive: One is driven by a situation, makes little proactive
use of information, & actions are not planned
• Complete Planning: Plans ahead & actively structures the
situation
• Opportunistic: Starts out with some form of rudimentary
planning
• Critical Point: Starts with the most difficult, the most unclear,
& most imp point

Startups:
Mindset of a small company and Ambition of a large company
What is expected
 Great Experience
 Fill the Customer Need
 Grow Fast & Make Changes
 Support of Technology
 Understand Competition

Why work with Startups:
Belief in people
Shared Vision
Motivation
Missionary
Proud
Personal & professional Identity
Information flow

In India >8 out of 144 with a valuation of $ 1 billion
Source: CB Insights, A VC and angel investment database
Out of 144 more than half from US
Around 20 from China
Five most Valuable startups
Uber $ 51 billion
Xiaomi $ 46 billion
Airbnb $ 25.5 billion
Palantir Technologies $ 25 billion
Snapchat $ 16 billion

Acquisitions
2020 will be an excellent time for buyouts:
Big players will be bigger & small startups will
either die out or get merged in the larger
players”

Culture
80% is defined by the leaders’
Personality
Strength
Weakness

• “You have to communicate what you want to
build in every meeting, in every email you write.
• Especially as a founder or a CEO, but even as a
manager, it has to be a huge chunk of your job
and your mindshare.”
• It’s also important to acknowledge that culture is
not a fixed thing. “As a core leader, you own it,
but you have to let it evolve,

EXCERCISE
Few Questions
What are the founder’s strengths
I am outstanding at?
What sets me apart from the people around me?
What does they value about people around?
What qualities drive them crazy about people?
What I look at my friends, What are the
characteristics they have in common?
Date of submission 19th July 2020 by midnight

HR for New Age Organizations 1
shailendra@imi.edu

Values
9/19/2021
The beliefs, customs, arts, etc. of a particular
society, group, place, or time
A way of thinking, behaving, or working that
exists in a place or organization
Core values of a company are, beliefs and
behavior of each member of the team pursuing a
goal & mission and is defined as a culture of a
company

Why we need to have…
9/19/2021
Utmost important…
Align people with values
 Stability
 Trust
 Exclusion
 Retention

As per Mahatma Gandhi..
9/19/2021
Your beliefs becomes your thoughts !
Your thoughts becomes your work !
Your work becomes your action !
Your action becomes your habit !
Your habit becomes your value !
Your value becomes your destiny !

What are the core values
9/19/2021
Personal independent values (unique feature)
although most important is business success
What values you want in your employees
What can never be tolerated?

Generally how many ?
9/19/2021
Out of 10: ????
Honesty
Integrity
Sincerity
Teamwork

These core values must translate to a …
9/19/2021
 Strong sense of purpose
 Relentless focus on success
 Aggressive and competitive
 High quality bar, bordering on perfectionism
 Likes changing and disrupting things
 New ideas on how to do things better
 High integrity
 Surrounds themselves with good people
 Cares about building real value over perceived value

Elements of high performance
Reflection
Accountability
Commitment
Conflict
Trust
9/19/2021

Contd…
9/19/2021
Successful entrepreneurs share common characteristics
 Follow your dream
 Take the risk
 Make the sacrifice
 Be persistent
 Know your customer
 Sell to survive and prosper
 Take care of your customers
 Hire the right employees

Establish a winning culture
9/19/2021
They know that shared values, philosophies
and behaviors align and combine to determine
the future success of an enterprise. They
establish a positive culture that inspires and
motivates workers.
 Value your employees
 Call upon mentors
 Communicate constantly

Contd…
9/19/2021
Regardless of your corporate culture, certain
policies should be established within all
companies so as to limit liability. Some
recommended policies
 Equal employment
 Anti-discrimination and harassment
 Employment at will

Culture
9/19/2021
Initial Stage Growing
Team is motivated by founder’s
vision
Founders hire new employees
“in their own image”
Strengthening cultural bonds
Everyone is willing to pitch in &
work hard
Communications are formal
Decision making is based on
consensus or founder flat, but
not on political influence
New employees less likely to be
mission-driven
New employees likely to be more-
diverse, bringing new perspectives
but changing the company culture in
the process
Friction between “old guards” and
new comers over behavioral norms,
need for process, etc.
Political behavior is a growing
concern
Leaders strive to re-ignite
entrepreneurial spirit and avoid
bureaucracy

Organization Structure
Initially Growing
Fluid “jack-of-all-trade”
roles with few formalized
reporting relationships
Specialized roles & subgroups within formalized
functional units
Spans of control designed to ensure cross-
functional coordination & appropriate tradeoff
between customer responsiveness & operational
efficiency
Management Systems & Processes
Few systems & processes
9/19/2021
Formal systems & processes
-finance
-product engineering
-sales/marketing
-operation/customer support
-Human resource

Leadership Team
Division of
responsibilities are
not clear
Founders may get replaced by professional
CEOs
Others Co-founders may be fired/demoted
But CEOs from a big company may find
trouble adjusting to rhythm of scaling up
startup
Governance
A small board Each round of funding demand a seat in
board
9/19/2021

Understanding Organization Culture
9/19/2021
• Dimensions:
* Means-Oriented versus Goal-Oriented
* Internally driven versus Externally driven
* Easygoing work discipline versus Strict work discipline
* Local versus Professional
* Open system versus Closed system
* Employee oriented versus Work oriented
* Degree of acceptance of leadership style
* Degree of Identification with your organization
Hofstede’s Multifocus Model

Means-Oriented versus Goal-Oriented
9/19/2021
• The means-oriented versus goal-oriented dimension is,
among the six dimensions, most closely connected
with the effectiveness of the organization.
• In a means oriented culture the key feature is the way
in which work has to be carried out; people identify
with the “how”. They perceive themselves as avoiding
risks and making only a limited effort in their jobs,
while each workday is pretty much the same.
• In a goal-oriented culture employees are primarily out
to achieve specific internal goals or results, even if
these involve substantial risks; people identify with the
“what”.

Internally driven versus Externally driven
9/19/2021
• In a very internally driven culture employees perceive their
task towards the outside world as totally given, based on the
idea that business ethics and honesty matters most and that
they know best what is good for the customer and the world
at large.
• In a very externally driven culture the only emphasis is on
meeting the customer’s requirements; results are most
important and a pragmatic rather than an ethical attitude
prevails.
• This dimension is distinguishable from means- versus goal-
orientation because, in this case, it is not impersonal results
that are at stake, but the satisfaction of the customer, client or
commissioning party.

Easygoing work discipline Vs Strict work discipline
9/19/2021
• This dimension refers to the amount of internal structuring,
control and discipline.
• A very easygoing culture reveals loose internal structure, a
lack of predictability, and little control and discipline; there is
a lot of improvisation and surprises.
• A very strict work discipline reveals the reverse. People are
very cost-conscious, punctual and serious.

Local versus Professional
9/19/2021
• In a local company, employees identify with the boss and/or
the unit in which one works. In a very local culture,
employees are very short-term directed, they are internally
focused and there is strong social control to be like everybody
else.
• In a professional organization the identity of an employee is
determined by his profession and/or the content of the job. In
a very professional culture it is the reverse.

Open system versus Closed system
9/19/2021
• This dimension relates to the accessibility of an organization.
In a very open culture newcomers are made immediately
welcome, one is open both to insiders and outsiders, and it is
believed that almost anyone would fit in the organization.
• In a very closed organization it is the reverse.

Employee oriented versus Work oriented
9/19/2021
• This aspect of the culture is most related to the management
philosophy per se. In very employee-oriented organizations,
members of staff feel that personal problems are taken into
account and that the organization takes responsibility for the
welfare of its employees, even if this is at the expense of the
work.
• In very work-oriented organizations, there is heavy pressure
to perform the task even if this is at the expense of
employees.

Degree of acceptance of leadership style
9/19/2021
• This dimension tells us to which degree the leadership style of
respondents’ direct boss is being in line with respondents’
preferences. The fact that people, depending on the project
they are working for, may have different bosses that doesn’t
play a role at the level of culture.
• Culture measures central tendencies.

Degree of Identification with your
organization
9/19/2021
• This dimension shows to which degree respondents identify
with the organization in its totality. People are able to
simultaneously identify with different aspects of a company.
Thus, it is possible that employees identify at the same time
strongly with the internal goals of the company, with the
client, with one’s own group and/or with one’s direct boss and
with the whole organization. It is also possible that employees
don’t feel strongly connected with any of these aspects.

Best Practices
9/19/2021
Incorporate your mission and values
Performance=Think harder and longer about
values
Interview for culture fit
Evaluate performance on culture as well
Make it a daily habit

shailendra@imi.edu

HR Anti-patterns at Startups
9/19/2021
• HR is led by an employee with no HR
experience whatsoever.
• HR is Too close with early employees and
executives at the company.
• HR’s primary charter is “maintaining the
culture”.

• HR doesn’t have a comprehensive diversity
strategy.
• HR approaches workplace dysfunctions as
isolated problems.
• HR is defensive, not proactive.
9/19/2021

ROOT PROBLEMS
9/19/2021
• HR is not taken seriously by startup management and
its employees.
• HR is often gendered as “female” or “women’s work”
in a male-dominated industry, and branded “non-
technical” in an industry that privileges only
programming.
• HR is NOT a specialized function requiring domain
knowledge and experience, but rather a
“supplemental” part or outgrowth of other jobs.

• HR is just another “soft skill” largely irrelevant to the
founding and building of technology. That “anyone can
do it” and that the roles and responsibilities typically
taken on by HR – and the problems it addresses – will
magically be taken care of by the startup’s “meritocratic”
culture.
• HR is viewed as, at best, a necessary evil, a tedious
bureaucratic duty.
9/19/2021

What are the key HR issues that startups face in
their infancy?
9/19/2021
• HR at Start ups: What is meaning of Competency
mapping?
• Start up Recruiting: What is a meaningful way for
a upstart company to deal with key employee
attrition?
• What are the biggest challenges a "small
business" faces that doesn't have an HR
department?

• What are problems start up HR or start ups
are facing for finding top talents and how
difficult is it for job seekers to find the right
start up
• What kind of HR polices need to be setup for
any start up company?
9/19/2021

THE TOP FIVE HR ISSUES FOR START-UPS
9/19/2021
• ISSUE #1: HIRING THE RIGHT PEOPLE
• ISSUE #2: DECIDING WHAT TO PAY PEOPLE
• ISSUE #3: KNOWING WHAT HR-RELATED LAWS
APPLY
• ISSUE #4: COMMUNICATION
• ISSUE #5: TERMINATING EMPLOYEES

TIPS FOR NAVIGATING HR ISSUES AS A
STARTUP
9/19/2021
• Hire a star executive team
• Hire technical talent who can get your
product out the door
• Pay your team what is fair

The Standard Causal Model of HRM

The 8-box model by Paul Boselie

shailendra@imi.edu

People Strategy
5
4
3
2
1
0
0 1 2 3 4 5
Future
ial
Potent
High
Potentials
Solid
Citizens
In the
wrong job
Performance
Potential
Low High
Low
High

High Performance Systems in
New Age Organizations: A Framework
TRUST WORTHY
LEADERSHIP
PERSONALITY
TEAM WORK
ORIENTATION

A framework for Talent Management
TRUST WORTHY
LEADERSHIP
PERSONALITY
TEAM WORK
ORIENTATION

shailendra@imi.edu

Speed of the leader is the speed of
9/19/2021
the team

A really good team is more than the
sum of its players
9/19/2021

Good teamwork is not about
togetherness
it is about dependence on each other
9/19/2021

Why Teams?
Complimentary
Skills
Real Time
Problem Solving
Social Dimension
1+ 1 = 3
9/19/2021

Team Development Cycle
Storming
Norming
Performing Forming
Coming together is a beginning, Staying together is progress,
and Working together is success." -Henry Ford
9/19/2021

“Transforming” High Performance
 Create an open climate
that values difference
 Avoid insulating the
team
 Foster critical evaluation
of actions and decisions
 Focus on performance
not on team-building
 Discuss priorities
openly
 Pay attention to
measurements
 Provide development
 Provide career path
 Pay attention to
turnover
 Succession planning
9/19/2021

“Many of us are more capable
than some of us…but none of
is as capable as all of us!”
9/19/2021
-quote from Tom Wilson

shailendra@imi.edu

We must be the change we wish
to see in the world
9/19/2021
~ M.K. Gandhi ~

The best way out of a difficulty is through it
9/19/2021

ASSESSING TEAM ROLES
The essence of this module is Taking
Your Team to New Heights, Examining
your team members, their roles within the
team, and how they interact in the team is
vital to create a productive work
environment for leaders.
“A team is a group of ordinary people doing extra ordinary
work”
9/19/2021

The difference between ordinary and extra
ordinary is a little EXTRA
9/19/2021

TEAMS
9/19/2021
• There are two important observations to share
on the basis of consulting and training
programmes carried out by IMI, New Delhi in
team working:
– Increasing number of organizations are developing
flatter structures and moving towards teams working
within a matrix style task function.
– Almost more than 90% of managers identified their
preferred climate is the task culture

Opportunity:
9/19/2021
• If handled well a considerable motivational
opportunity exists for many people in many
organizations to:
– Create a structure with which they can identify,
– Enable them to develop in a team,
– Combine technical expertise with an awareness of
their preferred role,
– Provide an environment to celebrate team success.

Challenge:
9/19/2021
• Teams have, by implied definition, a finite time in
which to be in existence – i.e., the duration of the
assignment.
• For some longer duration assignments, this may
involve members leaving and others replacing them.
• In these situations it becomes vital that team role as
well as team functions are combined, so that the
balance and harmony within the remainder of the
team are not disturbed.

Existing / Inherited Teams
9/19/2021
• For many of you there may not be the comparative
luxury of selecting a team from scratch. You have to
manage with an existing group of individuals- without
the escape of a assignment conclusion, to enable you
to re-group or re-form.
• This is the reality and the challenge of building an
effective team !!!
• The first step thus is to encourage team role
awareness.

Team Roles
9/19/2021
• Dr. Meredith Belbin suggested one of the most well
known, used, and documented team role Indicators,
based on his work.
• Belbin acknowledges that it is far easier to forecast
teams that will fail, than teams sure to succeed.
• There is a pre disposition with most managers to pick a
team composed of the cleverest and most talented
people they could find.
• Unfortunately for them, Belbin discovered that the
most disaster prone team is the one exclusively
composed of very clever people.

Types:
9/19/2021
• Dr. Belbin and his colleagues recognized
individuals who could make a crucial
difference to team performance, and they
named them as following types:
Chairperson/Coordinator (CO) Monitor/Evaluator (ME)
Shaper (SH) Company Worker/Implementer (IMP)
Plant (PL) Team Worker (TW)
Resource/Investigator (RI) Finisher (F)

Chairperson/Coordinator (CO)
9/19/2021
• Coordinates the way the team moves towards group objectives
• Makes best use of team resources
• Recognizes team strengths and weaknesses
• Maximizes the potential of each team member
Positive Qualities
• Welcomes all contributions on their merit
• Strong sense of objectives
Allowable Weaknesses
• Is unlikely to be the most creative member of the team

Shaper (SH)
9/19/2021
• Shapes the way in which team effort is channeled
• Directs attention to the setting of objectives and priorities
• Seeks to impose a shape or pattern on the group discussions and
outcomes
Positive Qualities
• Drive and a readiness to challenge inertia,
ineffectiveness, complacency and self deception
• Prone to provocation, irritation and impatience

Plant (PL)
9/19/2021
• Advances new ideas and strategies
• Pays special attention to major issues
• Creative approach to problem solving
Positive Qualities
• Imagination, intellect, knowledge
• Inclined to disregard practical details or protocol

Resource/Investigator (RI)
9/19/2021
• Explores and reports on ideas and developments
outside the team
• Creates external contacts
Positive Qualities
• Capacity for contacting people and exploring anything new
• Ability to respond to challenge
• Loses interest once the initial fascination has
passed

Monitor/Evaluator (ME)
9/19/2021
• Analyses problems, evaluates ideas and
suggestions
• Enables teams to take balanced decisions
Positive Qualities
• Judgment, discretion, hard - headedness
• May lack inspiration and ability to motivate
others

Company Worker/Implementer
(IMP)
9/19/2021
• Turns concepts and plans into practical working
procedures
• Carries out agreed plans systematically and efficiently
Positive Qualities
• Organizing ability, practical common sense
• Self – disciplined, hard working
• Lack of flexibility, unresponsive to new or unproven
ideas

Team Worker (TW)
9/19/2021
• Supports team members in their strengths
• Builds on suggestions
• Compensates for team member’s shortcomings
• Improves communication between members
Positive Qualities
• Ability to respond to people and situations
• Promotes team spirit
• May be indecisive at moments of crisis

Finisher (F)
9/19/2021
• Ensures nothing has been overlooked
• Check details
• Maintains a sense of urgency
Positive Qualities
• Capacity for follow through
• Perfectionism
• Tendency to worry about small things
• Reluctant to let go

LET’S KNOW ABOUT OURSELF ???
9/19/2021
The Questionnaire

shailendra@imi.edu

Designing High Performance
Systems

Factors That Influence Performance
8–3

Performance Diagnosis
Source: Scott Snell, Cornell University. 8–4

Performance Appraisal
Appraisal Programs
Administrative Developmental
Compensation Ind. Evaluation
Job Evaluation Training
Career Planning
8–5

Purposes for Performance Appraisal
8–6

Managerial Issues Concerning
Appraisals
8–7
• Managers feel that little or no benefit will be
derived from the time and energy spent in the
process.
• Managers dislike the face-to-face
confrontation of appraisal interviews.
• Managers are not sufficiently adept in
providing appraisal feedback.
• The judgmental role of appraisal conflicts with
the helping role of developing employees.

Let me
count the
ways…
Insufficient
reward for
performance
Manager lacks
information Lack of
appraisal skills
Manager not
taking appraisal
seriously
Manager not
prepared
Manager not
being honestor
sincere
Employee not
receiving
ongoing
feedback
Ineffective
discussion of
employee
development
Unclear
language
Performance
appraisals fail
because…
8–8

Establishing Performance Standards
Actual
performance
Perfor nc
ma e measures
Zone of valid
assessment
Criterion contamination:
Elements that affect the
appraisal measures that are
not part of the actual
performance
Strategic relevance:
Performance standards
linked to organizational
goals and competencies
Criteriondeficiency:
Aspects of actual performance
that are not measured
Reliability:
Measures that are
consistent across
raters and over time
8–9

Strategic
Relevance
Individual standards directly relate
to strategic goals.
Criterion
Deficiency
Standards capture all of an
individual’s contributions.
Criterion
Contamination
Performance capability is not
reduced by external factors.
Reliability
(Consistency)
Standards are quantifiable,
measurable, and stable.
8–10
Performance Standards Characteristics

Alternative Sources of Appraisal
8–11

Alternative Sources of
Performance Appraisal
Peers
Supervisor
Team
Self
Customers
Subordinates
8–12

Performance Appraisal under an MBO Program
8–13
Management by Objectives

The Balanced
Scorecard
Source: Robert
Kaplan and David
Norton, “Strategic
Learning and the
8–14
Balanced Scorecard,”

Which System Is Best?
• It is difficult to predict how a set of employees
will react to a given rating system.
• Electronic monitoring

Introduction
⚫Whetheryou’re going to bean HR managerata 250+
employeecompanyora small businessownerwith
only one other worker, becoming data-driven when it
comes toworkforce management strategy isn’t just the
best route to organizational growth and prosperity—
it’s the only route.

Key HR Metrics
⚫Key HR Metric #1: EmployeeTurnover Rate
⚫Key HR Metric #2: Employee Engagement
⚫Key HR Metric #3: Total Overtime Cost
⚫Key HR Metric #4: Profit Per Employee

HR Metric #1: Employee Turnover Rate
⚫How tocalculate it:
First, find your average numberof employees in a
given period:
= (# of employeesat beginning of period + # of
employeesatend of period) / 2
Onceyou have that, divide the numberof employees who
left over that same period by theaverage and
multiple by 100 to find the employee turnoverrate:
= (# of employeeswho left / average # of employees)
x 100

⚫ Why it’sa key HR metric:
Turnoveris a key HR metric becausea revolving door is the
biggest red flag that you have a dysfunctional workforce. High
turnoveris also oneof the moreexpensiveproblemsyou can have in
HR. When a worker leaves, the cost to find a replacement, recruit
them, hire them, onboard them and train them can cost anywhere
from 16 percentof salary for lowerpositions all theway up to 213
percent (!) of salary forrolesat theseniorand executive levelswhen
you factor in lost productivity.
Avoiding high turnover is critical, but what constitutes “high” isn’t
going to be the same for every small business. Calculate your
turnoverrateevery month (oreveryyear, if you’resmaller), then use
tools tocompare itwith theaverage foryour industryand region.

HR Metric #2: Employee Engagement
⚫ How to calculate it:
You can calculate employee engagement using a number of different methods and
tools, but the quickest and easiest way is through something called the Employee
Net Promoter Score (eNPS). eNPS is a single metric that can tell you how much of
your workforce is advocating your company to others. To calculate eNPS, you first
need to send an anonymous survey to your workers that includes this question:
“On a scale from 0 – 10, how likely are you to recommend working at this
company to a friend?”
When you have all the results, categorize them as either a “detractor” (scores 0 – 6),
“neutral” (scores 7 – 8) or a “promoter” (scores 9 – 10):
Then simply subtract the percent of the total that are detractors from the percent
of the total that are promoters:
eNPS = % Promoters – % Detractors

⚫ Why it’sa key HR metric:
If employee turnover lets you know when your
workforce is collapsing, then employeeengagement
does theopposite.
⚫ It’s a key HR metric because it tells you how much of your
workforce is enthusiasticabout theirwork, committed to the
companyand championing yourorganization toothers.
⚫ As it is pointed out, effectiveemployeeengagement metrics
should attempt tocover fivecategories:
⚫ Current job understanding
⚫ Relationshipwith directsupervisor
⚫ Perceptionof senior leadership
⚫ Opportunities forcareergrowthand development
⚫ Work conditions
Reference: GartnerGuide

HR Metric #3: Total Overtime Cost
⚫Calculating overtime is different depending on if a
worker is hourlyorsalaried. Here’sa breakdown:
Hourly
Employees
Employee wage rate x 1.5 x # of hours
worked per week over 42.5
Salaried Determine their hourly wage rate:
= Employee’s gross salary for a pay period
/ # of non-overtime hours worked in a pay
period
= Hourly wage rate x 1.5 x # of overtime
hours worked

⚫Why it’sa key HR metric:
⚫Total overtime cost is a key HR metric because if it
keeps rising atyoursmall business, it’s pointing toone
of twoglaring issues that need to be remedied quickly:
either you don’t have enough employees or you’re
allocating workershifts inefficiently.
⚫If bad schedules are leading to paying more overtime,
check out employee scheduling software. These
platformscan automaticallycreate the mostoptimized
schedule within the constraints of your workforce and
flag any shifts thatcould potentially beextra costly.

HR Metric #4: Profit Per Employee
⚫How tocalculate it:
If calculating profit peremployee sounds simple, it’s
because it is. Likewedid with employee turnoverrate,
firstcalculate your average numberof employees:
= (# of employeesat beginning of period + # of
employeesatend of period) / 2
Then divide total profit (a.k.a. net income) over thatsame
period by theaverageemployee number for profit per
employee:
= Total profit / average # of employees

⚫Why it’sa key HR metric:
Profit peremployee isa key HR metric because itcuts to
the heart of the matterwhen itcomes to staffing and
productivity: how much is each individual contributing
back to thecompany?
⚫It’s also as good a number as any to weigh yourself against a
competitor*: If you’re both making Rs. 3,00,000 a year, but
they’re doing it with 10 workers while you’re doing with 20,
you’re losing.

Current State of Total Rewards
9/19/2021
⚫To maintain international compensation IHR
managers are commonlyperforming a numberof
critical activities including:
⚫Combining MNC’s local and global data in order to
developappropriatecompensation packages
⚫Using centralized total reward systems in order to
maintain financial control overcompensation and
benefit programmes that span multiplegeographic
locations
⚫Linking global financial outcomeswith geographically
dispersed costs

Complexities faced by IHR managers
9/19/2021
⚫Increase useof outsourcing
⚫Decentralization of incentives
⚫Balancing performance metrices

International Total Rewards-
MNC Objectives
9/19/2021
⚫Ensuring that total rewards policies are consistent with
business strategies
⚫Developing Total Rewards policies that maximize
recruiting and retention
⚫Developing cost effective global total rewards policies
⚫Creating global total rewards policies that result in fair
processes and outcomes

International Total Rewards-
Employee Objectives
9/19/2021
⚫Creating HR policies that provide financial protection
⚫Creating HR policies thatofferopportunities for
financial growthand careeradvancement
⚫Creating HR policies thatease repatriation

Key Components of Global Total
Reward Programme
9/19/2021
⚫Base Salary
⚫Foreign service inducements
⚫Allowances
⚫Benefits
⚫OtherBenefits

Base Salary
9/19/2021
⚫Base pay is the building block of employee’scompensation
package both domestically and internationally.
⚫In adomesticsetting, the term base salary refers to theamount
of pay that employee earns on a regular basis for performing
their jobs.
⚫In turn, the base pay serves as a benchmark for other forms of
discretionarycompensation thatemployee may receivesuch as
merit pay, bonuses and incentives
⚫In contrast, for employees working abroad, base salary may be
either the comparable pay that s/he would receive for
performing the same job in his/her home country or the
amountof pays/hewould receive forperforming the job in the
host country.

⚫Adjustments are then made to base salary for
accepting a foreign assignment, hardships they may
encounter, etc
⚫Levelsof base payvarydepending on the MNC’s
headquarters location.
⚫Compensation mix comprises of 80% of base pay in
countries likeAustralia, New Zealand, Austria, Finland
and France
⚫Compensation mix comprisesof less than 40% of base
pay in India
9/19/2021

Some Examples:
9/19/2021
⚫Many MNC’s also provideadditional salary payments to
expatriates thatare independentof performance
⚫ Brazilian MNCs required by law to pay 13th month salary
⚫ In Mexico, 15 days of basepay is mandated as Christmas
bonuses
⚫ Mexico also has laws mandating profitsharing of 10% of
companies pretax profitsamong employees
⚫ In Australia, MNCs are required to payemployerretirement
contributionsequal to 9% of employeesearnings per year

Foreign Service Inducements
9/19/2021
⚫Foreign Service Premiums: 10-30% of Base Salary
⚫Mobility Premiums: Lump-sumcash bonus
⚫Hardship Premiums: 5-35% of Base Salary
⚫Danger Pay: 5-35% of Base Salary

Allowances
9/19/2021
⚫Costof Living Allowance
⚫Goodsand Services Allowance
⚫Exchange Rateprotection programmes
⚫Housing and Utilities Allowance
⚫Rest, Relaxationand Rehabilitation Leave
⚫Relocation Allowance
⚫Spouse/ FamilyAllowance
⚫Education Allowance

Benefits
9/19/2021
⚫International Benefits programmes often present
complexitiesaboveand beyond thoseassociated with
international compensation.
⚫Pension plans, savingsand investmentsare difficult to
manage betweencountriesdue tovariations in
national rulesand regulations
⚫There isvery littleportabilityof retirementand health
insuranceplans.
⚫Generally benefits comprise less than 20% of expat’s
compensation

Other Benefits
9/19/2021
⚫Making contributions tosavingsand investments
plans
⚫Equity portionsof mortgagepayments
⚫Paying insurancepremiums
⚫Child support
⚫Student loans
⚫Car Subsidies
⚫Club memberships
⚫Domestic help, security, etcon case tocase basis

Approaches to International
Compensation
9/19/2021
⚫The going rateapproach
⚫Home Country Based balance sheetapproach
⚫Head quarters based balancesheetapproach
⚫Modified Home Country Based balance sheet
approach

HR for New Age Organization by Professor S

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